IMF approves debt relief for Malawi

….Hopes funds for debt will be used for vital medical efforts

The International Monetary Fund (IMF) has cancelled debt payments for six months for Malawi and 24 other poor countries due to the Coronavirus pandemic.

Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund, issued a statement on Monday saying the board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic.

“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts,” she said.

The CCRT will currently provide about US$500 million in grant-based debt service relief, with US$185 million of that money coming from a pledge by the U.K. and US$100 million being provided by Japan.

Georgieva said countries such as China and the Netherlands are also stepping forward with important contributions.

“I urge other donors to help us replenish the Trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” she said.

Countries that will receive debt service relief are Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.

Las month, the World Bank and the IMF asked bilateral creditors to offer debt relief for poor countries, saying the coronavirus outbreak is likely to have severe economic and social consequences for where two-thirds of the world’s population live in extreme poverty.

United Nations Secretary-General Antonio Guterres also urged the suspension of debt repayments for the world’s poorest and most vulnerable countries so they can use their scant resources for the coronavirus crisis.

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